World, US Stocks Post Best Month Since 2023 Amid Trade, Inflation Uncertainty

Global stock markets experienced strong gains in May, marking their best monthly performance since late 2023 despite ongoing volatility related to U.S.-China trade tensions and tariff disputes. The S&P 500 closed flat on the last trading day of May but still recorded a gain of over 5% for the month, with the Nasdaq surging nearly 10%, its best since November 2023, while the Dow rose about 3%. Investor sentiment was affected by renewed trade disputes after President Trump accused China of breaching their trade deal and reports emerged of U.S. plans to expand tech restrictions targeting Chinese firms. Meanwhile, cooling inflation data, including the Fed's preferred core Personal Consumption Expenditures (PCE) index, provided some relief. The MSCI world index also rose more than 5% for the month, supported by a rise in U.S. Treasury yields and a strengthening U.S. dollar poised for its first monthly gain of 2025. However, uncertainties remain due to legal challenges related to tariffs and concerns over provisions in Trump's budget bill allowing potential taxes on foreign investment.